Open Lending and Nebula finalize business combination, begin Nasdaq trading
The journey of Open Lending being acquired by Nebula, a special purpose acquisition company sponsored by True Wind Capital, that began back in January climaxed this week as the business combination was approved by Nebula’s shareholders at an “extraordinary” general meeting
With the business combination completed, Nebula changed its name to Open Lending, and its common stock was expected to begin trading on the Nasdaq Stock Market under the ticker symbol LPRO on Thursday. Officials said late on Wednesday that the share price closed at $13.35, representing an increase of approximately 30% from Nebula’s closing share price on June 5.
The development began with an announcement back on Jan. 6 when Open Lending and Nebula stated that entered into a definitive business combination agreement. Under the terms of the agreement, Nebula was to acquire Open Lending through a new Delaware holding company, which was to become a publicly-listed entity with an implied estimated enterprise value at closing of approximately $1.3 billion.
That January announcement indicated the consideration payable to the stockholders of Open Lending would consist of a combination of cash and shares of common stock of the company. In addition to the $275 million of cash held in Nebula's trust account (assuming no redemptions), additional investors committed to participate in the transaction through a $200 million private placement of common stock at $10 per share anchored by True Wind and several “noteworthy and leading” fundamental investors.
To recap, Open Lending is an enablement platform for the automotive finance market powered by proprietary data, advanced decisioning analytics, an innovative insurance structure and scaled distribution. The platform can enable near-prime consumers, — which officials estimate at approximately 50% of the market — to finance their vehicles at more attractive rates when compared to traditional lending alternatives, while presenting a similar risk profile to the finance company as that of a prime borrower.
Furthermore, Open Lending's technology platform can unlock value for a diverse partner ecosystem, benefitting dealers, finance companies, insurers and OEMs. Through the platform, Open Lending facilitated more than $1.7 billion of paper in 2019 for more than 275 finance companies.
As a result of the business combination, this week’s announcement indicated Open Lending’s management team — led by cofounder, president and chief executive officer John Flynn and cofounder, chief financial officer and chief operating officer Ross Jessup — will continue to lead the company.
The announcement also mentioned that Nebula co-chairman and co-chief executive officer Adam Clammer will serve as a director on the combined company’s board of directors.
Also of note, Open Lending’s existing minority investor, Bregal Sagemount, a growth equity firm, will continue as a public stockholder and participate on the board as well, according to the company.
“We are pleased to complete the combination and look forward to partnering with John, Ross, and the rest of Open Lending’s management team at this exciting inflection point in the company’s growth,” Clammer said. “Our team believes that management has built an extraordinary business and we’re excited to support them along their public market journey.”
Flynn added, “The past 15 years, and especially the past few months, have shown how incredible our team is and how significant the opportunity in front of us is to grow this business. We are excited to partner with our new board of directors and investors as we continue to execute on Open Lending’s growth plan as a public company.
“We believe the public warrantholders’ decision to maintain their investment in company is further evidence of the value of Open Lending,” Flynn went on to say.
Financial Technology Partners and FTP Securities served as strategic and financial advisor and Goodwin Procter as legal counsel to Open Lending in connection with the transaction.
Deutsche Bank Securities and Goldman Sachs & Co. acted as capital markets advisors, financial advisors, and private placement agents, and Greenberg Traurig acted as legal counsel to Nebula in connection with the transaction.